What are the features of a savings account?
A savings account is the first step a person takes toward saving. As the name suggests it is a place where the savings are stored but it is not an investment.
The savings account is the conduit through which investments can be made. But the first step starts from taking the money out of your money box and into a bank.
Why have a savings account?
Rather than keeping money at home in your money box, keeping it in a bank is suitable as it offers interest on the deposit made. This is the main reason why you have a savings account. The interest rate is not high, but it helps in partially softening the blow of inflation. In other words, the money one deposits in the bank are working to give you some return. Not only is the money in the savings account safe and earns interest it has other advantages also.
Features of a savings account
The following are the features of savings account
- First, the money can be withdrawn at any point in time. With ‘Any-Time-Money’ (ATM) counters available across the country, a saving bank account holder who has debit/ ATM card facility can withdraw money from anywhere in the country. This adds a safety element where the depositor need not move around carrying cash in his pocket.
- With e-payment on the increase, the saving bank account helps in regular monthly payments like that of electricity, society maintenance, telephone and mobile bill payment, insurance premium payment among others.
- Salaries can be directly credited to the savings bank account. This helps both the employee as well as the employer. For the employer with a single click of the button, money is transferred to all the employees. For the employee, they are saved the travel to the bank as well as can have the money credited in their account at a faster pace.
- Post-retirement the same savings bank account helps in getting a regular pension.
- Loans that a person takes are generally linked to the savings bank account which is the primary account where his salary is deposited. Direct electronic instructions can be given from the savings bank account or Post Dated Cheques (PDCs) from this account. Savings bank account often eases the process of availing loans.
- Cheque bounce history of the customer’s savings account tells his creditworthiness. A customer with no defaults on loans on his name has a much higher credit rating and finds it easier to get loans.
- Having a savings bank account encourages the habit of saving rather than keeping cash in hand. This discourages impulsive shopping.
- Savings account helps in accessing other financial instruments like online trading, mutual funds investments through direct transfers among others.
- A standing instruction can be given to the bank where if the amount in the Savings Account crosses a particular threshold it will be transferred to any other higher yielding instrument.
- It helps in making travel plans easier by booking tickets as well as hotel bookings through online mode.
- The passbook or electronic statement of the savings bank helps in keeping an automatic tab of where the money came from and where it was spent.
- At the end of the year, it helps in filling your tax returns with the income tax authorities. Since all the transactions are recorded in the bank statement, a salaried employee has the little hassle to file his returns.